Are Restaurants Replacing Dept. Stores as Anchors?

Bobb: “What we’re seeing a lot lately are restaurants making their indoor spaces smaller and their patios bigger.”

SAN DIEGO—With experiences being the hot, new retail category, consumers are drawn to shopping centers for their dining options, for which landlords are becoming quite competitive, CBRE VP Carrie Bobb tells GlobeSt.com. According to the company’s latest research on the restaurant industry and its impact on the Southern California market, strong employment and increased tourism propelled the region forward. The restaurant resurgence in Southern California kept restaurant and fast-food vacancy below 4% and asking lease-rates growth at an annual average of 4% for the last five years.

The research also showed that America is a food nation, which created a hot market for restaurateurs and resulted in a prominent increase in dining options over the last few years. In nearly every market, the fast-casual sector dominated the growth trend, providing consumers with a bevy of food options. Premier locations for leading concepts acted as major draw and remained successful because of high consumer needs. However, according to CBRE, although Americans are eating better than ever before, economic shifts point toward the start of a slowdown. In addition to customer demand for quality options at low prices, rising employment costs, rent increases and a glut of similar restaurant concepts are shrinking profit margins, and national restaurant performance is trending below previous projections. Still, Southern California remains a top destination for the nation’s leading food concepts, which further tightens vacancy and drives up asking and effective lease rates. Leading restaurant economists predict an inevitable slowdown, however, which should caution restaurant owners and real estate professionals to be more strategic when selecting retail space for new and expanding tenants, CBRE reports.